Fitch Rates Manatee County, FL's Non-AV Bonds 'AA+'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned an 'AA+' rating to the following Manatee
County, Florida (county) obligations:

--$82 million revenue refunding and improvement bonds, series 2013.

The bonds are expected to sell the week of Feb. 18 via negotiation.
Proceeds are being used to refund the county's outstanding revenue
improvement bonds, series 2004 and 2006 and refund outstanding 2004
transportation bonds and fund some capital projects.

The bonds are secured by pledged revenues consisting of non-ad valorem
(non-AV) revenues of the county deposited into the debt service fund.
The county has covenanted to annually budget and appropriate, by
amendment if necessary, from legally available non-ad valorem revenues
(CB&A) sufficient funds to pay debt service when due. In addition, the
county's non-ad valorem pledge is extended on parity to the port
authority bonds to replenish any deficiencies in the cash-funded reserve.

The indenture does not create a lien on non-ad valorem revenues and the
county's pledge is subject to the payment of obligations secured by
specific non-ad valorem revenues.

NON-AV REVENUES PROVIDE SOLID MADS COVERAGE: Available non-AV revenues
of the county provide ample coverage of maximum annual debt service
(MADS) of bonds secured by the county's CB&A pledge. These revenues
stabilized in fiscals 2011 and 2012 after four years of decline.

PRUDENT FINANCIAL MANAGEMENT: County financial operations are
conservatively managed as evidenced by ample reserves and solid
liquidity. Officials have made significant spending cuts to counter
sizable declines in revenues. Recently, the county has been using part
of its extensive reserves to maintain critical levels of service, but
under the multi-year spending plan, balances will remain well above the
county's policy minimum of 20% of expenditures.

MANAGEABLE LONG-TERM LIABILITIES: The county's debt load is modest with
direct debt rapidly amortized. Pension and OPEB liabilities are moderate
and do not pressure spending.

CREDIT PROFILE

STRONG MADS COVERAGE FROM RECURRING NON-AV REVENUES

CB&A MADS coverage from available recurring non-AV revenues, including
an amount which would be required to refill the Manatee Port bonds,
series 2012 DSRF, is robust at 4.7x. Taking into account essential
service expenditures which must be funded ahead of debt service, MADS
coverage remains very healthy at 1.50x MADS. Additional available
funding sources include sizable unrestricted reserves in the general
fund and transportation trust fund totalling over $90 million.

The county's non-ad valorem revenue base is both broad and diverse.
Chief sources of revenue include the half-cent sales tax, gas taxes, and
service charges. Recurring legally available non-ad valorem revenues
grew a modest 0.46% in fiscal 2012, the second straight year of growth,
after four consecutive years of recession-induced declines totalling
14%. The recent gain was driven primarily by increases in the half-cent
sales tax and state revenue sharing allocations and growth in service
charge revenues.

WELL-MANAGED FINANCIAL OPERATIONS

County finances are prudently managed, characterized by strong reserve
levels and ample liquidity. Officials have implemented spending
reductions in response to severe multiple-year declines in property tax
revenues, the largest revenue source. Cost-cutting measures include
personnel and service reductions, reduced capital spending and
technology improvements. As a result, general fund spending fell by over
16% between fiscals 2008 and 2010.

More recently and in light of ongoing property tax contraction,
management decided to use a portion of its reserves to alleviate
additional cuts to critical programs. Additional operating fund balance
drawdowns are planned over the next three years totalling approximately
$30 million. Despite the planned use of reserves, general fund balance
would still be maintained at a level well above the county's minimum
target balance of 20% of expenditures.

For fiscal 2012, the county reported a general fund net operating
deficit of approximately $13.4 million; modestly better than the
budgeted $16 million net operating loss. Despite the deficit,
unrestricted general fund balance remains at a still sizable $99 million
or 44% of spending. A 4% decline in property tax revenues was only
partially offset by increased state revenue sharing receipts. Fiscal
2012 expenditures fell by 2.0% from fiscal 2011 spending due to ongoing
county cost-cutting including reductions in full-time positions.

The fiscal 2013 budget provides for an average 3% increase in employee
salaries, the first increase in six years, and adds approximately $1.7
million to the sheriff's department budget. Increases in compensation
will be balanced with minor reductions in personnel, lower benefit costs
and a modest gain in intergovernmental revenues. Officials indicate that
property tax and sales tax collections are over budget and project
year-end unassigned general fund balance to decline by a somewhat better
than budgeted $16 million.

DIVERSIFIED ECONOMY EXPERIENCES A HEALTHY RECOVERY

The county's economic base is diversified with major sectors consisting
of services, retail and manufacturing. Tourism and agriculture are also
important components of the local economy. After losing nearly 14% of
its employment base between 2006 and 2010, the county is experiencing a
robust jobs recovery that appears to be strengthening. Employment
increased by 1.6% in 2011 and an additional 2.4% in 2012. December 2012
employment increased rapidly year over year by 2.5%.

As a result of the county's job recovery, unemployment rates have fallen
from over 12% in 2010 to an average of 9% in 2012. The December 2012
unemployment rate of 7.8% was down from 9.9% in the prior year, and is
now in line with the state and national benchmarks.

Manufacturing and construction sectors have been important drivers of
these job gains. A number of area manufacturing firms have expanded
during the past 12 to 18 months and fiscal 2012 building permit values
are up 31% over fiscal 2010 permit activity. Tourism has also
experienced a strong season with fiscal 2012 tourist tax collections up
nearly 16% over fiscal 2011 totals. Housing values within the county
declined by over 50% from the peak in 2006 but have increased
significantly during the past year, according to Case-Schiller.

SLOWING TAX BASE LOSSES POINT TO NEAR-TERM STABILIZATION

Typical of many Florida counties, Manatee County lost 31% of its tax
base between fiscals 2008 and 2012, due to a combination of state-wide
property tax reform and the housing meltdown. Taxable value losses have
eased over the past two fiscal years, dropping by only 2% in fiscal
2013, which Fitch believes is indicative of near-term stabilization.
Officials project the tax base to grow about 1% to 2% next year followed
by gradually accelerating growth in the 1 1/2% to 2 1/2% range over the
next three years. Fitch views these projections as reasonable given the
recent positive trends in both jobs and housing.

BELOW-AVERAGE LEVERAGE

Debt indices are below average with direct and total debt to full value
of 0.4% and 1.5%, respectively. The county relies primarily upon debt
secured by its CB&A pledge rather than general obligation bonds.

The new issue refunds most of the county's outstanding bonds secured by
non-ad valorem revenues for debt service savings. The refunding does not
extend the term of the bonds to be refunded and amortization will remain
aggressive with over 80% of principal retired within ten years. Debt
service requirements do not claim a disproportionate share of county
spending; fiscal 2012 debt service requirements were a manageable 8.0%
of general fund and debt service expenditures. The county's capital
needs are manageable and tax-supported debt plans include very modest
issuances.

MANAGEABLE PENSION AND OPEB LIABILITIES

The county's retirement obligations do not represent a cost pressure.
The county participates in the Florida Retirement System (FRS) in which
nearly all county employees are members. The county's fiscal 2012
contribution to the plan was lower than prior contributions due to
changes in state law which now require employees to contribute 3% of
their salary and represented a manageable 5.2% of general fund spending.

Retired employees also have the opportunity to participate in the
county's defined benefit health care plan for active employees, which
includes medical coverage, prescription drug benefits, dental benefits
and life insurance coverage. The county subsidizes the retirees' costs
on a pay-go basis. Fiscal 2012 contributions totalled $3.8 million or
just 1.7% of general fund expenditures. The county's unfunded accrued
actuarial liability as of fiscal 2012 of $147 million represented just
0.5% of full value. The county recently increased the proportion of
health insurance premium costs paid by the retirees, which is expected
to reduce the county's future liabilities.

Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.

In addition to the sources of information identified in the
Tax-Supported Rating Criteria, this action was additionally informed by
information from Creditscope, University Financial Associates,
S&P/Case-Shiller Home Price Index, IHS Global Insight, Zillow.com,
National Association of Realtors

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